Chinese developers to raise luxury home prices in prime cities
Upward price trend at the high end spurred by rate cut but unlikely to spill over into broader market just yet due to a glut of unsold homes
Some Chinese developers are planning to raise prices for new luxury projects in prime areas this year, in a rare sign of improving sentiment in a market that saw new home prices fall for the last eight months of 2014.
Luxury property sales took a hit last year as the country's anti-corruption campaign discouraged conspicuous consumption, but buyers are now taking advantage of easier credit and a stock market rally to upgrade their homes.
Some developers are starting to raise prices in major cities, following the central bank's surprise November rate cut and its decision this month to lower the amounts lenders must hold as reserves as Beijing tries to revitalise an economy growing at its slowest rate in more than two decades.
The high-end trend is unlikely to spill over into the broader market just yet, however, due to a glut of unsold homes.
"It's not going to lead to a full recovery in the market," said Clement Luk, Shanghai-based chief executive for eastern China at property agency Centaline. "Liquidity is more loose compared with a year ago, but the market doesn't have the environment for a big price [rise] because there's still a lot of inventory and there's no apparent improvement in the macro economy."
Some investors have taken profit from the bullish stock market and are investing in real estate
China Resources Land, Franshion Properties and China Merchants Property are all planning to increase prices for some of their new projects in prime areas this year, according to company officials.